•However in the case cited by Auditor General, Treasury disbursed the cash between July 1 and July 8, 2021, yet the same was for the fiscal year ending June 30, 2020.
•Gathungu said she was not satisfied with the Treasury’s explanation that the amount represented receipts of proceeds from Sovereign Bond and IMF.
Image: WILFRED NYANGARESI
The National Treasury is facing queries for backdating money disbursed to ministries, departments and state agencies.
This followed a case where the National Treasury released Sh165 billion to state agencies, county governments, and public debt outside the June 30 deadline.
Transactions of a particular financial year are required to be executed from July 1 to June 30 of the following year.
However in the case cited by Auditor General Nancy Gathungu, Treasury disbursed the cash between July 1 and July 8, 2021, yet the same was for the fiscal year ending June 30, 2020.
“This was against the provisions of Regulation 97 (4) of the Public Finance Management (National Government) Regulations, 2015 which states that an actual transaction taking place after the June 30, shall not be treated as about the previous financial year,” the auditor said in a report tabled in Parliament recently.
Gathungu said she was not satisfied with the Treasury’s explanation that the amount represented receipts of proceeds from Sovereign Bond and International Monetary Fund.
The auditor dismissed the management’s explanation that the Controller of Budget approved the late disbursement.
She said the Treasury was in breach of the Constitution and against globally acclaimed accounting practices.
“The practice of backdating transactions to June 30 is against the concept of IPSAS cash accounting,” Gthungu said.
“This is in breach of Article 260 of the Constitution which states that a financial year means twelve months ending on the thirtieth day of June or any other day prescribed by national legislation.”
She said the practice of backdating payments has resulted in discrepancies between exchequer disbursements reported by the National Treasury and Exchequer receipts reported by some counties in their financial statements.
“My opinion is not modified concerning the above matter,” the auditor said.
During a meeting with stakeholders to discuss a proposed change in the law to shorten the audit deadlines, the auditor asked ministries to avoid backdating payments.
She said before the Finance committee of the National Assembly, that in such instances, state agencies should move the transactions to the new financial year.
Governors have over time lamented late disbursements from the exchequer, some spilling over from a financial year to another.
Section 17(6) of the Public Finance Management Act, 2012 provides that The National Treasury disburses monies to county governments in a timely fashion.
The disbursement should be made no later than the 15th day from the start of every quarter of a financial year.
Controller of Budget reports have also over the years highlighted exchequer delays as affecting budget absorption.
The report for the first half of the current financial year said the delays affected project implementation, staged low absorption of development expenditure budget and occasioned avoidable pending bills.
In a separate report, Gathungu said the late releases stemmed from revenue shortfalls, some of which stem from low collections from local sources.
“The revenue shortfall may be a critical contributor to delayed exchequer releases and under absorption of the budget,” she said.
The auditor said to enhance the quality and accuracy of fiscal forecasting, there was the need to ensure coordination between the Treasury and other stakeholders.
She cited agencies that are contributing critical information and macroeconomic data for fiscal forecasting, especially the Kenya Revenue Authority.
“This will ensure more realistic and effective forecasts of revenue and cash flows,” Gathungu said.
Edited by Kiilu Damaris